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by Mike Caswell

A New York judge has extended the U.S. Securities and Exchange Commission's asset freeze against Montreal tout John Babikian, finding there is strong likelihood that Mr. Babikian committed securities fraud. The evidence suggests that Mr. Babikian carried out a pump-and-dump, according to the judge. The judge has further found that it is impossible to know exactly how much money Mr. Babikian made from his alleged fraud and where he may be keeping any ill-gotten gains.

The decision is a loss for Mr. Babikian, 26, former operator of the tout site AwesomePennyStocks.com. The SEC initially won the asset freeze when it filed civil charges against him on March 13, 2014, claiming that he fraudulently made $1.9-million promoting a purported Utah coal miner called America West Resources Ltd. (All figures are in U.S. dollars.) The frozen assets include two Los Angeles area homes and a partial interest in a private jet.

Mr. Babikian protested the asset freeze order in a March 31, 2014, court filing, complaining that it was overly broad. He said the amount reasonably at issue in the case was just $549,670, but the value of the assets the court froze exceeded $10-million. As he saw it, the freeze amounted to an attempt to deny him access to money he could use to defend himself.

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